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In Morocco, Casablanca Stock Exchange provides us with reliable data. Both the

In Morocco, Casablanca Stock Exchange provides us with reliable data. Both the websites of the Stock Exchange and the financial regulator include raw data about shareholders of listed companies, members of their board of directors and their profits. Furthermore, the 73 listed companies of the Casablanca Stock Exchange represent the diversity of the sectors of the Moroccan economy. These 73 entities are also described in the press as the most dynamic and modern Moroccan companies. It is thus important for us to analyze the data provided in order to study the place of the financial sector as well as the relationship with the monarchy which is the main political actor in Morocco. Our qualitative study shows that interviewees identified Banks and Institutional investors as central actors in Casablanca Stock Exchange. Some executives describe Banks, especially the ones owned by the royal holding, as the most profitable listed companies. Others state that institutional investors, which are shareholders in many listed companies, are key actors in the funding of businesses owned by the royal holding or by families close to the monarchy. We assess these two aspects by analyzing the data gathered on the profitability of listed companies as well as membership of their board of directors. We collect the data on the net profits of listed companies and group them according to their sector. Building on the median net profits11 we give a score to each sector. The median net profits of Finance (577 350 000 Dhs) is the highest and is almost equal to the sum of the medians of the following sectors: Energy (359 942 000 Dhs) and Construction (224 844 484.7 Dhs). Compared to other sectors, IT and Industry have the lowest score respectively 17 921 500 Dhs and 16 175 000 Dhs. This idea converges with the statement of a CEO of an industrial company who declares that it is “irrational to invest in the industrial sector in Morocco while Real Estate provides higher profits with much less effort”. When we rank listed companies according to their net profits we notice that among the ten first profitable organizations five are included in the financial sector (see table 5 below). Even if Maroc Telecom, owned by the Emirati group Etisalat, is the most profitable entity in Casablanca Stock Exchange, it is the only one in the top ten among the eight IT companies while half of the financial sector includes high profitable companies. Maroc Telecom with 5.54 billions Dirham of net profit is followed by royal holding’s bank Attijariwafa with 4.14 billions Dhs. Two among the 12 construction companies as well as one state-owned bank (BCP) and Benjelloun’s Family Bank (BMCE) have more than 1 billion Dhs net profit. Wafa Assurance, an insurance company which is part of the royal holding, follows Ciments du Maroc which is owned by the German group HeidelbergCement. Then comes BMCI, a subsidiary of French group BNP Paribas. The last entity, Cosumar, is the only Agro- business company in this top ten. For the moment, we have considered profitability, which is an organizational attribute related to the capacity of an organization, here a listed company, to provide material resources in the form of profits. We will now consider a relational attribute which sheds light on the capacity of an actor, here a board member or a company or a sector, to position itself in a favorable way compared to other actors. While the first attribute is related to getting resources the second one deals with central position such as being gatekeeper. In economic sociology and organizational studies, the notion of interlocking directorates (Mizruchi, 1996) can be used as a proxy to assess the relational attribute of actors. We say that there is an interlock between two firms when they share the same board member. The interdependencies between companies that are created through the sharing of common board members can lead to connections, influence or control. A group of companies that is cohesive and connected to other groups have a strategic location compared to isolated and non-cohesive groups. Furthermore, an executive that is present in a lot of board companies has access to important information and can meet executives that do not know each other. Building on the Pujo Committee (U.S. House of Representatives, 1913) which identified the bank owned by J. P. Morgan as controlling the US industry12, scholars are using interlocks to study the structure and dynamics of US capitalism. Some have emphasized bank centrality and its influence on other sectors of the economy (Dudouet et al., 2015). Zeitlin (1974) provides evidence on the role of some US holding families that control important banks while Useem (1980) shows that the structure of US capitalism is made of cliques of companies centered around one or many banks. In his literature review on corporate control, Mizruchi (2004) states that, in addition to banks, other financial companies such as insurance providers are central not only in the US but also in European economies. Few studies have applied the notion of interlocking directorates to study cronyism in the financial sectors of MENA region. In this paper, we propose to deploy this in the case of Moroccan listed companies. There are a number of reasons why Morocco provides an excellent case to explore. Moroccan economy is both dominated by family groups and has seen several institutional transformations. In 1995, the law of public limited companies introduced the principle of collective responsibility in corporate governance. This challenges the supremacy of the owner and emphasizes the role of board members. The guidelines of the World Bank and the IMF (2003) as well as the survey conducted by the Moroccan Business Association (CGEM, 2005) and its suggestions led to the publication of the “Moroccan Code of Best Practices in Corporate Governance” in 2008 as well as the creation of the Moroccan Institute of Board members (l’Institut Marocain des Administrateurs) in 2009. The role of this institute is to participate in the professionalization of board members and diffuse the model of “independent board members”. The model of independent board members came from the agency theory (Jensen and Meckling 1976) that was promoted to face the managerial control of companies in the US. Due to the dispersion of capital, large US companies were controlled by executives instead of shareholders (Berle and Means 1932). Jensen and Meckling (1976) and other agency theorists suggested to set up incentives for the convergence of both executives’ interests and shareholders’ objectives. Some practices became popular such as the recruitment of independent board members as well as the ranking of board of directors. Moroccan capitalism is dominated by family owners and has never seen an era of managerial control (Saadi, 1984). Even today, it is very difficult to find a Moroccan company with no majority owner at least in the form of an alliance between two or three shareholders. Furthermore, the law states that the general assembly chooses the members of the board of directors in an election by majority vote (1 share = 1 vote). This leads to board of directors that are composed, in many cases, of the owner and his relatives, allies or a coalition of main shareholders. But for the case of listed companies, the situation is quite different. The CEO of the pension fund CIMR, who is one of the main interlockers in Casablanca Stock Exchange, told us that “it is important for the market reputation of the majority shareholder to allow representatives of minority shareholders. We can have one seat in the board due to a gentleman’s agreement with the majority shareholder but in some cases, we can negotiate, upstream, a shareholders' agreement with the possibility of having one or two seats in the board of directors”. It is thus important to study interlocks to capture actors that have a strategic position in the network of listed Moroccan companies. This will enable us to determine the position of the financial sector including banks and insurance companies in the Morocco’s evolving political economy. To assess the role of the financial sector in term of multiple and intermediary position we build a network of common board members between listed companies and group them according to their economic activities. Initial data provides us with information on names of the board members of each listed company. We structured this data in a matrix to highlight the connections between each two organizations. We then group the companies according to eight economic activities: Industry, Energy, Finance, Construction, Transportation, Credit, agribusiness and IT13. After eliminating low connections, less than 20, we obtain the data that is displayed in Table 6 and Figure 1 showing interdependencies between eight sectors of the listed companies. This network evidences the high centrality of the financial sector which is composed of 6 banks and 4 insurances. Thus, Figure 1 shows that Finance is located at the center of board connections of economic activities. If we consider the diagonal of the table, we notice that the group of financial companies has the highest score of uploads/Finance/ la-structure-de-propriete-des-entreprises-cotees-hafid-mohamed.pdf